HSBC upgrades Hellenic Petroleum to buy from hold and lifts target to 10.0 euros from 7.70 euros previously as the free-cash-flow is turning stronger, and debt service costs decline, says.

The refiner has likely reimbursed the largest pat of the 755 million euros overdue payable to Iran which was a primary reason for limited OCF and FCF generation over the period despite a supportive macro environment, argues.

“As the company enters a materially stronger phase of its FCF cycle there may be several implications for the story: (1) Hellenic Petroleum may consider stronger dividend payouts, (2) it may accelerate investments in upstream assets given it has been active in securing rights to explore offshore blocks recently, (3) it could continue the deleveraging cycle. We see room for all three options and thus expect strong DPS growth in the mid-term with 2017-18e dividend yields of 3.7% and 4.5% respectively.”

Shares ended lower, close to intra-day lows, in quiet dealings. Greece’s upgrade by Fitch by one notch late Friday met a muted reaction, as it was largely discounted, after a similar move by S&P in January. The bourse was close on Monday due to a public holiday.

The general share index shed 0.5% to close at 842 points. Some 56 million euros worth of stocks exchanged hands.

“The Athens Exchange Group has been a consistent underperformer vs. the ASE index for the past two years (by 9.5% in 2016 and 13.7% in 2017).We expect this weaker share price performance to continue in 2018E, amid stretched valuation multiples and a big premium vs. its peers,” says.

The stock, valuationwise “appear reasonable only if we assume volumes closer to historical averages. On our sensitivity analysis, the stock trades at 12.1x EV/EBITDA if we input average volumes of EUR 120m per day in our model.”

Euroxx Securities argues that Greek equities could rise over 25% in 2018, as it sees many catalysts in place for a re-rating of local shares. The sharp drop in Greek bond yields, the return of investor confidence, the strong economic recovery combined with the encouraging fiscal performance, accelerated corporate earnings growth and valuation support and the limited risk of political stability in the event of early elections are all factors that could spark re-rating.

“Hence, in our view, assuming that no new major external negative shock takes place, Greek equities could surpass this year the +25% y-o-y gains recorded in 2017,” says.

Its top-picks include large, liquid stocks with good fundamentals and attractive valuation (OTE, Jumbo), and strong growth momentum (Mytilineos Group), as well as quality, medium-sized companies with supportive industry fundamentals (Aegean Airlines) or combining many of the above qualities (Terna Energy).

Among banks, Euroxx prefers National Bank due to its superior liquidity, sector-low ELA reliance and leading NPE/NPL cash coverage, and Alpha Bank due to its best-in-class capital position and quality.

Stocks are trading slightly higher in range-bound trade, as investors are eying Fitch’s update on Greece’s credit rating review late on Friday. Moreover, the expiry of February’s derivatives keeps investors at bay. In contrast, bond yields are declining in quiet dealings as investors expect Fitch to follow suit of S&P’s upgrade last month. Currently, Fitch rates Greece ‘B-’ with a positive outlook.

At 1250 local time, the general share index was trading 0.3% higher to 845 points. Volumes were light, with just 17 million euros worth of stocks exchanging hands. Coca-Cola HBC was up 3.1%, PPC +1.1%, OPAP +0.8%, Eurobank +0.7%.

On the bonds’ side, the 10-year benchmark was yielding 4.28%, down 13 bps from Thursday’s close.

Shares ended higher in a light volume session, with index visiting both sides several times. Coca-Cola HBC was largely responsible for the index’s positive sign at close. In contrast, bond underperformed, as yields rose, bucking the declining yield spread environment in the periphery.

‘The local assets will remain vulnerable to risk aversion trade,” a fund manager says. “So pressure should continue at least in the short-term.”

The general share index added 0.5% to close at 826 points. Some 41 million euros worth of stocks exchanged hands.

CCHBC was the day’s top performers, following the release of the full-year interims and the distribution of the generous dividend. The stock added 6%. In contrast, Ellaktor shed 4.3%, PPC -2.1%, NBG -1.4%.